Correlation Between BioNTech and Flutter Entertainment

Can any of the company-specific risk be diversified away by investing in both BioNTech and Flutter Entertainment at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining BioNTech and Flutter Entertainment into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between BioNTech SE and Flutter Entertainment plc, you can compare the effects of market volatilities on BioNTech and Flutter Entertainment and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in BioNTech with a short position of Flutter Entertainment. Check out your portfolio center. Please also check ongoing floating volatility patterns of BioNTech and Flutter Entertainment.

Diversification Opportunities for BioNTech and Flutter Entertainment

0.05

Correlation Coefficient

BioNTech  Flutter Entertainment

Significant diversification

The 3 months correlation between BioNTech and Flutter is 0.05. Overlapping area represents the amount of risk that can be diversified away by holding BioNTech SE and Flutter Entertainment plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Flutter Entertainment plc and BioNTech is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on BioNTech SE are associated (or correlated) with Flutter Entertainment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Flutter Entertainment plc has no effect on the direction of BioNTech i.e., BioNTech and Flutter Entertainment go up and down completely randomly.

Pair Corralation between BioNTech and Flutter Entertainment

Given the investment horizon of 90 days BioNTech is expected to generate 1.15 times less return on investment than Flutter Entertainment. In addition to that, BioNTech is 1.47 times more volatile than Flutter Entertainment plc. It trades about 0.08 of its total potential returns per unit of risk. Flutter Entertainment plc is currently generating about 0.14 per unit of volatility. If you would invest  18,731  in Flutter Entertainment plc on September 22, 2024 and sell it today you would earn a total of  7,747  from holding Flutter Entertainment plc or generate 41.36% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

BioNTech SE  vs.  Flutter Entertainment plc

BioNTech SE

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in BioNTech SE are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of fairly strong basic indicators, BioNTech is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Flutter Entertainment plc

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Flutter Entertainment plc are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Flutter Entertainment unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with BioNTech and Flutter Entertainment

The main advantage of trading using opposite BioNTech and Flutter Entertainment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BioNTech position performs unexpectedly, Flutter Entertainment can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Flutter Entertainment will offset losses from the drop in Flutter Entertainment's long position.

The idea behind BioNTech SE and Flutter Entertainment plc pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

Check out your portfolio center.

Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.